In Fresno, analysts said "central Valley real estate will continue to be a good investment at least for this year, although appreciation rates will likely decline from record levels of previous years."
Market that characterized the last five years will settle down to more normal conditions, panelists at the Economic Development Corp. serving Fresno County's annual forecast agreed that the overheated real estate.
Said Robin Kane, an apartment specialist, ``Sanity is returning,'' Real estate brokers said they expect 2006 to still be good, but don't confuse a more normal market with a weak one.
San Francisco-based developer Luis A. Belmonte predicted decreasing demand for office and industrial properties as California shifts to a technology economy, whether real estate will remain a strong investment into the future is unclear.
Kane said, ``There will be a productivity revolution in the service sector,'' he also added "companies will become more productive, employees will work from remote locations and railroads will become rolling warehouses -- that will mean less demand for office and warehouses,"
Panelist said "for the immediate future, real estate appears solid,"
2006 will be ``a stabilizing year,'' Scott Leonard, president of Guarantee Real Estate, he predicted an 8 percent dip in sales, which would end five years of steady gains, from 6,480 in 2000 to 10,224 in the central San Joaquin Valley in 2005.
Those factors will mean homeowners won't realize the 23.7 percent appreciation rate of 2005, but should still see values rise 7 percent if interest rates stay under 7 percent and the economy stays healthy, the number of homes on the market is increasing, which is likely to affect the market, Leonard said. He also said he expects investors who buy properties solely for appreciation to back away.
"Construction is up, but tenants with top-notch credit are harder to find. He also said Southern California is showing signs of weakness and Fresno County employment growth has been heavy with construction jobs, so any slowdown in real estate could cause the unemployment rate to spike." Kane said.
By: Dijon Wainwright